Pre-Markets Down Another -2% on Good Jobs Report

Friday, April 4, 2025

OK. In our quest for good news in the stock market… oops, never mind. Pre-market futures had been for another steep drop down, but when monthly jobs numbers came out, these improved to only “really bad” levels. But this was so short-lived, it didn’t even make it to the end of this paragraph.

Major stock indexes are all down more than -2% in today’s pre-market, adding to the range of collapse of -4% (Dow) to -6% (Nasdaq) yesterday. The Dow is down another -1000 points, the S&P 500 is -150 and the Nasdaq is -500 points. Bond yields are falling: now sub-4% on the 10-year for the first time since it was ramping up in October of last year: +3.904%. The 2-year is +3.566%.

China has fired a retaliatory shot in the tariff war begun on the White House lawn Wednesday afternoon: 34% additional tariffs on all imported U.S. goods. This is expected to especially hit U.S. agriculture markets like the corn-producing industry, as well as chemical producers like DuPont DD, down -11% in ealry trading. And because China is one of the U.S.’s biggest trading partners, we expect other countries newly tariffed by the Trump administration to follow their lead.

In addition, news from the Fed indicates an immediate jump from two interest rate cuts yesterday to FIVE this morning: a 100% chance for June, 99% for July, 94% for September, 74% for October and 59% in December. The normally careful and contemplative Fed has made its most abrupt about-face since the start of the Covid pandemic. Should all these cuts come to pass, we’d take the Fed funds rate down to +3.00-3.25% by the end of this year.

This strongly suggests that the Fed expects this climate of high tariffs on a global scale to continue indefinitely. President Trump himself sent out a message on social media this morning that his “policies will never change” — in all-caps, presumably for emphasis. Ex-Vice Chair of the Federal Reserve Roger Ferguson takes a much more cautious view on rate cuts this morning, still referring to the possibility as “if.” Based on reported data, the U.S. economy remains strong.
 

BLS Job Report Higher than Expected: +228K, Unemployment +4.2%

This morning, new monthly jobs numbers are out in the form of nonfarm payrolls from the U.S. Bureau of Labor Statistics (BLS). These surprised to the upside: +228K headline jobs created for March, much better than the +140K estimate. The Unemployment Rate blips up 10 basis points (bps) to +4.2%, the highest since November of last year.

This is the highest rate of employment since the big +323K jobs reported back in December. The previous two months were revised down -48K jobs overall, including 117K for February from 151K originally reported. Federal government job losses do not currently reflect the massive layoffs from the DOGE program of the Trump administration: -4K were reported from a month ago. Expect these figures to grow substantially in future months.

Hourly Wages came in steady at +0.3%, as expected. Year over year, this ticks down 10 bps to +3.8%, the lowest print since +3.6% reported in July. The Average Workweek ticked up 10 bps to 34.2, and Labor Force Participation grew the same amount to 62.5% (which is still historically pretty low). Healthcare led the way at +54K, followed by +24K in Retail, +24K in Social Assistance, and Transportation/Warehousing +23K.

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